UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Soliciting Material Pursuant to
[_] Confidential, For Use of the SS.240.14a-11(c) or SS.240.14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
North Bancshares, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
1) Amount previously paid:
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March 15, 2002
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of North Bancshares,
Inc. (the "Company"), I cordially invite you to attend the Company's Annual
Meeting of Stockholders (the "Meeting"). The Meeting will be held at 4:00 p.m.,
local time, on April 26, 2002 at the main office of the Company, located at 100
W. North Avenue, Chicago, Illinois.
At the Meeting, stockholders are being asked to elect three directors
and to ratify the appointment of Crowe, Chizek and Company LLP as the Company's
independent auditors for the fiscal year ending December 31, 2002. Your Board of
Directors unanimously recommends that you vote FOR the director nominees named
herein and FOR the ratification of the appointment of independent auditors.
Whether or not you plan to attend, PLEASE READ THE ENCLOSED PROXY
STATEMENT AND THEN COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT
IN THE ACCOMPANYING POSTPAID RETURN ENVELOPE AS PROMPTLY AS POSSIBLE. If your
shares are held with a bank or broker, check your proxy card to see if you can
also vote by telephone or through the internet. Voting as early as possible will
save the Company additional expense in soliciting proxies and will ensure that
your shares are represented at the Meeting.
Thank you for your attention to this important matter.
Very truly yours,
Mary Ann Hass
Chairman of the Board
NORTH BANCSHARES, INC.
100 West North Avenue
Chicago, Illinois 60610-1399
(312) 664-4320
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on April 26, 2002
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of North Bancshares, Inc. ("North Bancshares" or the "Company") will
be held at the main office of the Company, located at 100 West North Avenue,
Chicago, Illinois at 4:00 p.m., local time, on April 26, 2002.
A Proxy Card and a Proxy Statement for the Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon:
1. The election of three directors of the Company;
2. The ratification of the appointment of Crowe, Chizek and Company LLP as
independent auditors for the Company for the fiscal year ending
December 31, 2002;
and such other matters as may properly come before the Meeting, or any
adjournments or postponements thereof. The Board of Directors is not aware of
any other business to properly come before the Meeting.
Any action may be taken on the foregoing proposals at the Meeting on
the date specified above, or on any date or dates to which the Meeting may be
adjourned or postponed. Stockholders of record as of the close of business on
March 1, 2002 are the stockholders entitled to vote at the Meeting, and any
adjournments or postponements thereof.
You are requested to complete and sign the enclosed proxy card, which
is solicited on behalf of the Board of Directors, and to mail it promptly in the
enclosed envelope. If you hold your shares with a bank or broker, check your
proxy card to see whether you can also vote by telephone or through the
internet. Your proxy will not be used if you attend and vote at the Meeting in
person.
By Order of the Board of Directors
Victor E. Caputo
Corporate Secretary
Chicago, Illinois
March 15, 2002
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE MEETING. A SELF-
ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED
IF MAILED WITHIN THE UNITED STATES.
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PROXY STATEMENT
NORTH BANCSHARES, INC.
100 West North Avenue
Chicago, Illinois 60610-1399
(312) 664-4320
ANNUAL MEETING OF STOCKHOLDERS
April 26, 2002
This Proxy Statement is furnished in connection with the solicitation
on behalf of the Board of Directors of North Bancshares, Inc. ("North
Bancshares" or the "Company") of proxies to be used at the Annual Meeting of
Stockholders of the Company (the "Meeting") which will be held at the main
office of the Company, located at 100 West North Avenue, Chicago, Illinois, on
April 26, 2002, at 4:00 p.m., local time, and all adjournments and postponements
of the Meeting. The accompanying Notice of Meeting and form of proxy and this
Proxy Statement are first being mailed to stockholders on or about March 15,
2002. Certain of the information provided herein relates to North Federal
Savings Bank ("North Federal" or the "Bank"), a wholly owned subsidiary of the
Company.
At the Meeting, stockholders of the Company are being asked to consider
and vote upon (i) the election of three directors of the Company and (ii) a
proposal to ratify the appointment of Crowe, Chizek and Company LLP as the
Company's independent auditors for the fiscal year ending December 31, 2002.
VOTE REQUIRED AND PROXY INFORMATION
All shares of the Company's common stock, par value $.01 per share
("Common Stock"), represented at the Meeting by properly executed proxies
received prior to or at the Meeting, and not revoked, will be voted at the
Meeting in accordance with the instructions thereon. If no instructions are
indicated, properly executed proxies will be voted FOR the election of the
director nominees named in this Proxy Statement and FOR the ratification of the
appointment of the independent auditors. The Company does not know of any other
matters that may properly come before the Meeting. If any other matters should
properly come before the Meeting or any adjournment or postponement thereof, the
holders of proxies acting thereunder will have the discretion to vote on such
matters in accordance with their best judgment.
Directors will be elected by a plurality of the votes cast in person or
by proxy at the Meeting. The ratification of the appointment of Crowe, Chizek
and Company LLP as the Company's independent auditors requires the affirmative
vote of a majority of the votes cast on the matter. In the election of
directors, stockholders may either vote "FOR" all nominees for election or
withhold their votes from any nominee or all nominees for election. Votes that
are withheld and shares held by a broker, as nominee, that are not voted
(so-called "broker non-votes") in the election of directors will not be included
in determining the number of votes cast. For the proposal to ratify the
appointment of the independent auditors, stockholders may vote "FOR," "AGAINST"
or "ABSTAIN" with respect to this proposal. Proxies marked to abstain will have
the same effect as votes against the proposal, and broker non- votes will have
no effect on the proposal. One-third of the outstanding shares of the Common
Stock, present in person or represented by proxy, will constitute a quorum for
purposes of the Meeting. Abstentions and broker non-votes are counted for
purposes of determining a quorum.
A proxy given pursuant to this solicitation may be revoked at any time
before it is voted. Proxies may be revoked by: (i) filing with the Secretary of
the Company at or before the Meeting a written notice of revocation bearing a
later date than the proxy; (ii) duly executing a subsequent proxy relating to
the same shares and delivering it to the Secretary of the Company at or before
the Meeting; or (iii) attending the Meeting and voting in person (although
attendance at the Meeting will not in and of itself constitute revocation of a
proxy). Any written notice revoking a proxy should be delivered to Victor E.
Caputo, Secretary, North Bancshares, Inc., 100 West North Avenue, Chicago,
Illinois 60610-1399.
1
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Stockholders of record as of the close of business on March 1, 2002
will be entitled to one vote for each share then held. As of that date, the
Company had 1,164,035 shares of Common Stock issued and outstanding. The
following table sets forth information regarding share ownership of: (i) those
persons or entities known by management to beneficially own more than five
percent of the Company's Common Stock, including Joseph A. Graber, President and
Chief Executive Officer of the Company and the Bank; (ii) Victor E. Caputo,
Executive Vice President and Secretary of the Company and the Bank; and (iii)
all directors and officers of the Company and the Bank as a group. Except where
otherwise noted, the address for each holder listed below is: c/o North
Bancshares, Inc., 100 West North Avenue, Chicago, Illinois 60610-1399. For
information regarding individual share ownership by the directors of the
Company, see "Election of Directors."
Beneficial Owner Shares Beneficially Owned Percent of Class
---------------- ------------------------- ----------------
North Bancshares, Inc. 123,676(1) 10.62%
Employee Stock Ownership Plan
Umbrella Bancorp, Inc. 57,887(2) 4.97
5818 S. Archer Road
Summit, Illinois 60501
Mary Ann Hass/Elmer L. Hass 106,922(3) 9.19
Robert H. Rusher 79,055(4) 6.76
Joseph A. Graber 84,717(5) 7.21
President and Chief Executive Officer
Victor E. Caputo 23,911(6) 2.04
Executive Vice President and Secretary
Directors and executive officers 374,466(7) 30.94
of the Company and the Bank as a
group (11 persons)
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(1) The amount reported represents shares held by the Company's Employee Stock
Ownership Plan ("ESOP"),110,574 of which have been allocated to accounts of
participants. John P. Koch, the trustee of the ESOP, may be deemed to
beneficially own the shares held by the ESOP which have not been allocated
to the accounts of participants. Pursuant to the terms of the ESOP,
participants have the right to direct the voting of shares allocated to
their accounts. Unallocated shares held by the ESOP are voted by the plan
trustee in the same proportion that participants direct the allocated
shares to be voted.
(2) As reported by Umbrella Bancorp, Inc. ("Umbrella") in a Schedule 13D filed
with the Securities and Exchange Commission on February 4, 2002. Umbrella
reported having sole voting and dispositive powers over all shares listed.
(3) The Hasses are husband and wife. Mr. and Mrs. Hass are deemed to
beneficially own all shares held directly or indirectly by either
individual.
(4) Includes shares held directly and jointly with his spouse, as well as 5,458
shares subject to options granted under the 1993 Stock Option and Incentive
Plan ("Stock Option Plan") which are currently exercisable. Also includes
4,800 shares held by family members as to which beneficial ownership is
disclaimed.
(5) Includes shares held directly and jointly with family members, as well as
11,251 shares subject to options granted under the Stock Option Plan which
are currently exercisable.
(6) Includes 10,500 shares subject to options granted under the Stock Option
Plan which are currently exercisable.
(7) Includes shares held directly, as well as jointly with family members, and
shares held in retirement accounts, allocated to ESOP accounts, held in a
fiduciary capacity or by certain family members, with respect to which
shares the group members may be deemed to have sole or shared voting and/or
investment power. This amount includes 46,121 shares in the aggregate
subject to options granted under the Stock Option Plan which are currently
exercisable.
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I. ELECTION OF DIRECTORS
GENERAL
The Company's Board of Directors currently consists of seven members.
The Board is divided into three classes, each of which contains approximately
one-third of the members of the Board. Approximately one-third of the directors
are elected annually. Directors are elected to serve for a three-year period or
until their respective successors are elected and qualified. The Company's
bylaws provide that no person may serve as a director of the Company beyond the
annual meeting of stockholders immediately following the director attaining 75
years of age. Absent an amendment to the bylaws removing or modifying this
provision (which is not contemplated at this time), Directors Rusher and Hass
will be unable to serve beyond the 2004 annual meeting. Assuming Directors
Rusher and Hass are re-elected at the Meeting and are subsequently required to
retire as a result of this provision, the Board may select and appoint two
individuals to replace the retiring directors for the remainder of the retirees'
terms. Alternatively, the Board could choose to eliminate one or both of the
vacant directorships by reducing the number of directors.
The table below sets forth certain information regarding the
composition of the Company's Board of Directors, including each director's term
of office. The Board of Directors acting as the nominating committee has
recommended and approved the nominees identified in the following table. It is
intended that the proxies solicited on behalf of the Board of Directors (other
than proxies in which the vote is withheld as to a nominee) will be voted at the
Meeting FOR the election of the nominees identified below. If any nominee is
unable to serve, the shares represented by all valid proxies will be voted for
the election of such substitute nominee as the Board of Directors may recommend.
At this time, except as noted above, the Board of Directors knows of no reason
why any nominee may be unable to serve, if elected. Except as disclosed herein,
there are no arrangements or understandings between the nominees and any other
person pursuant to which the nominees were selected.
SHARES OF
COMMON STOCK
BENEFICIALLY PERCENT
POSITION(S) HELD DIRECTOR TERM TO OWNED AT OF
NAME AGE(1) IN THE COMPANY SINCE(2) EXPIRE MARCH 1, 2002(3) CLASS
- ------------------- ---------- ------------------- ---------- ------- ---------------- --------
NOMINEES
Robert H. Rusher 73 Director 1993 2005 79,055(4) 6.76
Elmer L. Hass 73 Director 1968 2005 106,922(5) 9.19
Frank J. Donati 49 Director 1998 2005 4,100 0.35
DIRECTORS CONTINUING IN OFFICE
James L. Ferstel 74 Director 1983 2003 37,229 3.17
Gregory W. Rose 42 Director 1997 2003 5,450 0.47
Mary Ann Hass 69 Chairman of the Board 1962 2004 106,922(5) 9.19
Joseph A. Graber 51 Director, President and 1993 2004 84,717 7.21
Chief Executive Officer
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(1) At December 31, 2001.
(2) Includes service as a director of the Bank.
(3) Amounts include shares held directly and jointly with family members, as
well as shares held in retirement accounts, held by certain members of the
named individuals' families, or held by trusts of which the named
individual is a trustee or substantial beneficiary,
3
with respect to which shares the respective directors may be deemed to have
sole or shared voting and/or investment power. Amounts also include 11,251,
5,458, 2,500, 10,414 and 3,750 shares subject to options granted under the
Stock Option Plan to Messrs. Graber, Rusher, Donati, Ferstel and Rose,
respectively, all of which are currently exercisable.
(4) Includes shares held directly and jointly with his spouse, as well as 4,800
shares held by family members as to which beneficial ownership is
disclaimed.
(5) Mr. and Mrs. Hass are husband and wife and may be deemed to beneficially
own all shares held directly or indirectly by each other.
The business experience of each director of the Company is set forth
below. All directors have held their present position for at least five years
unless otherwise indicated.
ROBERT H. RUSHER - Mr. Rusher retired in 1995 after serving as
President and Chief Operating Officer of the Company since its formation in
1993, and President and Chief Operating Officer of the Bank since 1992. He was
elected to the Bank's Board of Directors in 1960 while serving as attorney to
the Bank, and was appointed an Advisory Director of the Bank in 1979. Before
beginning his career with the Bank, Mr. Rusher was an associate with the law
firm of Koch & Koch and a partner in the firm of Eley, Rusher and Koch. Mr.
Rusher also served on the Board of Directors of the Chicagoland Association of
Savings Institutions and the Lincoln Park Conservation Association. Mr. Rusher
is the brother-in-law of Mrs. Hass.
ELMER L. HASS - Mr. Hass was employed as a foreman by Cragin Metal
Products, Inc. from 1955 until his retirement on November 30, 1993. Mr. Hass is
Mrs. Hass' husband.
FRANK J. DONATI - Mr. Donati has served as President of Donati
Financial Services, Inc., a consulting firm to financial institutions and
corporations, since 1997. From 1991 to 1996, Mr. Donati was Senior Vice
President of Finance at Bell Bancorp, Inc., the $1.9 billion holding company of
Bell Federal Savings, Chicago, Illinois. He has also held the position of Senior
Vice President, Chief Financial Officer and Treasurer at United Savings of
America and was a senior audit manager at KPMG LLP. Mr. Donati is a graduate of
DePaul University and a member of the Illinois CPA Society and the American
Institute of Certified Public Accountants.
JAMES L. FERSTEL - Mr. Ferstel has been a practicing attorney in the
Chicago area since 1952.
GREGORY W. ROSE - Mr. Rose is an owner, director and managing partner
of Monarch Tool and Die Company and STAG Real Estate Holdings.
MARY ANN HASS - Mrs. Hass has served as Chairman of the Board of the
Company since its incorporation in 1993, and as Chairman of the Board of the
Bank since 1968. She served as Chief Executive Officer of the Company from its
incorporation in 1993 until her retirement in July 1998, and as Chief Executive
Officer of the Bank from 1968 until July 1998. She has served in various
capacities since beginning her career with the Bank in 1950. Mrs. Hass has
served on the Board of Directors of the Illinois League of Financial
Institutions; the Board of Trustees of the Latin School of Chicago; the Board of
Directors of the New City YMCA, formerly known as ISHAM YMCA. She is also a past
Chairman and Director of the Chicagoland Association of Savings Institutions;
past President and Director of the Federal Savings and Loan Council of Illinois;
and past President and Director of the Lincoln Park Chamber of Commerce. She
also has served on the Board of Directors and the Supervisory Committee of the
Norwood Park Catholic Credit Union. Mrs. Hass served on the Resource Development
Committee of the Neighborhood Housing Services of Chicago, Inc. and is a member
of The Economic Club of Chicago. Mrs. Hass has also served on the Publications
Committee and the Housing Finance Development Committees of the International
Union of Housing Finance Institutions. Mrs. Hass is the wife of Director Elmer
L. Hass and sister-in-law of Director Robert H. Rusher.
JOSEPH A. GRABER - Mr. Graber was appointed Chief Executive Officer of
the Company and the Bank in August 1998, following Mrs. Hass' retirement from
these positions. Mr. Graber was appointed President of the Company and the Bank
in 1995 after serving as Executive Vice President and Corporate Secretary of the
Company since its formation in 1993, and Executive Vice President, Corporate
Secretary and Advisory Director of the Bank since 1992. Mr. Graber also has
served as Assistant Controller, Branch Manager, Vice President and Senior Vice
President during his tenure with the Bank, which began in 1972. Mr. Graber is
Vice Chairman and serves on the Board of Directors of the Chicagoland
Association of Financial Institutions. He also serves on the Board of Directors
of the Illinois League of Financial Institutions and the Lincoln Park Chamber of
Commerce. Mr. Graber is a member of the Bankers Club of Chicago, the Executives'
Club of Chicago and a past President of the Wilmette Kiwanis Club and has served
on the Board of Directors of the Wilmette Chamber of Commerce,
4
the Friends of the Near North Library and the Citizens Advisory Council for the
Community Area Resident Economic Center. He was also Trustee of the Chicago
Savings and Trust Forum and Chairman of the Lincoln Park Unit of the American
Cancer Society.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
MEETINGS AND COMMITTEES OF THE COMPANY'S BOARD OF DIRECTORS. The
Company's Board of Directors meets as needed upon the written request of the
Chairman of the Board or at least three directors. The Board of Directors met
eleven times during fiscal 2001. During fiscal 2001, no incumbent director of
the Company attended fewer than 75% of the aggregate of the total number of
Board meetings held while he or she was a director and the total number of
meetings held by the committees of the Board of Directors on which he or she
served during the period that he or she served.
The Board of Directors of the Company has standing Audit, Compensation
and Allocation and Executive Committees.
The Audit Committee recommends independent auditors to the Board,
reviews the results of the auditors' services, reviews with management the
systems of internal control and internal audit reports and ensures that the
books and records of the Company are kept in accordance with applicable
accounting principles and standards. The members of the Audit Committee are
Messrs. Donati, Rusher, Ferstel and Rose. This committee met two times during
the fiscal year ended December 31, 2001. For additional information regarding
the Audit Committee, see "Audit Committee Matters" below.
The Compensation and Allocation Committee is composed of Messrs.
Ferstel, Hass, Rose and Donati. This committee administers the Company's Stock
Option Plan and the Recognition and Retention Plan, and reviews compensation and
benefit matters. This committee met once during the fiscal year ended December
31, 2001.
The Executive Committee is composed of Mrs. Hass and Messrs. Graber and
Rusher. To the extent authorized by the Board of Directors and the Company's
Bylaws, this committee exercises all of the authority of the Board of Directors
between Board Meetings. Specifically, the committee works with senior management
to accomplish the goals and objectives of the Company, and to formulate future
business strategies. The Executive Committee did not meet during the fiscal year
ended December 31, 2001.
The Nominating Committee is composed of Messrs. Rusher, Ferstel and
Rose and is responsible for selecting nominees for election as directors. The
Nominating Committee met once during fiscal 2001. While the nominating committee
will consider nominees recommended by stockholders, the Nominating Committee has
not actively solicited such recommendations.
MEETINGS AND COMMITTEES OF THE BANK'S BOARD OF DIRECTORS. The Bank's
Board of Directors meets monthly and may have additional special meetings upon
the written request of the Chairman of the Board or at least three directors.
The Bank's Board of Directors met 13 times during the year ended December 31,
2001. During fiscal 2001, no incumbent director of the Bank attended fewer than
75% of the aggregate of the total number of Board meetings held while he or she
was a director and the total number of meetings held by the committees of the
Board of Directors on which he or she served during the period he or she served.
The Bank has standing Asset-Liability Risk Management, Compensation and
Allocation, Community Reinvestment Act ("CRA"), Executive, Interest Rate and
Loan Committees.
The Asset-Liability Risk Management Committee evaluates the Bank's
assets and liabilities and identifies problem assets. The committee also
considers investment recommendations and determines actions to be taken thereon.
The current members of this committee are Mr. Graber, Mr. Caputo, Martin W.
Trofimuk, Vice President and Treasurer of the Company and the Bank, Joseph M.
Perri, Senior Vice President of the Bank and D. Robert Harless, Assistant Vice
President and Controller of the Bank. This committee held four meetings during
the year ended December 31, 2001.
5
The Compensation and Allocation Committee establishes the salaries of
Bank personnel and reviews other compensation and benefit matters. Messrs.
Ferstel, Hass, Rose and Donati are the current members of the Compensation and
Allocation Committee. This committee met twice during fiscal 2001.
The CRA Committee reviews the Bank's CRA Statement and the Bank's
general overall compliance with the requirements of the CRA and makes
recommendations to the Board on changes to the CRA Statement. During fiscal
2001, the CRA Committee was comprised of Mr. Graber, Joseph M. Perri, Senior
Vice President of the Bank and Warren Rife, Assistant Vice President of the
Bank. This committee meets quarterly to review lending and other CRA activities.
The Bank's Executive Committee exercises the powers of the full Board
of Directors between Board meetings, except that this committee does not have
the authority of the Board to amend the charter or bylaws, adopt a plan of
merger, consolidation, dissolution, or provide for the disposition of all or
substantially all of the property and assets of the Bank. The Executive
Committee is composed of Mrs. Hass and Messrs. Graber and Rose. The Executive
Committee met twice during the fiscal year ended December 31, 2001.
The Interest Rate Committee manages the Bank's interest rate risk and
sets the interest rates paid by the Bank. The committee consists of Messrs.
Graber, Caputo, Trofimuk and Ms. Catherine Harper, Vice President of the Bank,
and meets once per week.
The Loan Committee reviews and evaluates loans and approves loans and
loan commitments, within the guidelines established by the Board. The current
members of this committee are Messrs. Graber, Caputo, Perri and Harless. The
Loan Committee met as necessary to approve loan applications, review loan
policies and set interest rates during the year ended December 31, 2001.
AUDIT COMMITTEE MATTERS
AUDIT COMMITTEE REPORT. The Audit Committee of the Company's Board of
Directors has taken the following actions with respect to the audited financial
statements of the Company for the fiscal year ended December 31, 2001.
o The Audit Committee has reviewed and discussed with the Company's
management the Company's fiscal 2001 audited financial statements;
o The Audit Committee has discussed with the independent auditors of the
Company's fiscal 2001 financial statements (Crowe, Chizek and Co. LLP)
the matters required to be discussed by Statement on Auditing Standards
No. 61;
o The Audit Committee has received the written disclosures and letter
from the independent auditors required by Independence Standards Board
No. 1 (which relates to the auditors' independence from the Company and
its related entities) and has discussed with the auditors their
independence from the Company; and
o Based on the review and discussion referred to in the three items
above, the Audit Committee recommended to the Board of Directors that
the audited financial statements be included in the Company's Annual
Report on Form 10-KSB for the fiscal year ended December 31, 2001.
The Audit Committee of the Company's Board of Directors:
Frank J. Donati, Chairman
Robert H. Rusher
James L. Ferstel
Gregory W. Rose
6
INDEPENDENCE OF MEMBERS AND AUDIT COMMITTEE CHARTER. Each member of the
Audit Committee is "independent" under the definition of independence contained
in the National Association of Securities Dealers' listing standards for the
Nasdaq Stock Market.
The Company has adopted a written audit committee charter. A copy of
the charter was attached to the Company's 2001 annual meeting proxy statement.
That proxy statement was filed with the Securities and Exchange Commission on
March 15, 2001.
DIRECTOR COMPENSATION
The Bank's directors and advisory directors were each paid an annual
retainer fee of $10,000 and an additional fee of $300 for each meeting of the
Bank's Board of Directors attended during fiscal 2001. The Company's directors
are paid a fee of $250 for each meeting of the Company's Board attended unless
such meeting is held immediately following a meeting of the Bank's Board of
Directors, in which case no fee is paid for the Company Board meeting. No fees
are paid for attending Board committee meetings. In 2001, the Bank paid Crowe,
Chizek and Company LLP $1,000 to prepare the joint personal 2000 federal and
state income tax returns of Directors Elmer and Mary Ann Hass.
7
EXECUTIVE COMPENSATION
The Company has not paid any compensation to its executive officers
since its formation. The Company does not presently anticipate paying any
compensation to such persons unless and until it becomes actively involved in
the operation or acquisition of businesses other than the Bank.
The following table sets forth information regarding compensation for
fiscal 2001 paid by the Bank to Joseph A. Graber, the Company's and the Bank's
President and Chief Executive Officer, and Victor E. Caputo, the Company's and
the Bank's Executive Vice President and Secretary. No other executive officer
earned a salary and bonus for fiscal 2001 in excess of $100,000.
==============================================================================================================================
SUMMARY COMPENSATION TABLE
- ------------------------------------------------------------------------------------------------------------------------------
LONG TERM COMPENSATION
ANNUAL COMPENSATION AWARDS PAYOUTS
- -------------------------------------------------------------------------- ---------------------- -------
RESTRICTED
OTHER ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION AWARD(S) SARS PAYOUTS COMPENSATION
POSITION YEAR ($)(1) ($) ($)(2) ($) (#) ($) ($)(3)
- ------------------------------------------------------------------------------------------------------------------------------
Joseph A. Graber 2001 $156,150 --- --- --- --- --- $34,006
President and Chief
Executive Officer 2000 148,150 --- --- --- --- --- 25,687
1999 139,150 --- --- --- 1,747 --- 26,529
- ------------------------------------------------------------------------------------------------------------------------------
Victor E. Caputo 2001 $106,500 --- --- --- --- --- $25,279
Executive Vice
President and 2000 101,000 --- --- --- --- --- 19,083
Secretary
1999 92,700 --- --- --- --- --- 17,072
==============================================================================================================================
(1) For Mr. Graber, includes director's fees of $14,150 for each of fiscal
year 2001, 2000 and 1999.
(2) Does not include perquisites which did not exceed the lesser of $50,000
or 10% of salary and bonus.
(3) Represents the dollar amount of term life insurance premiums paid by
the Bank on behalf of the officer and the dollar value, as of December
31, 2001, of contributions to the officer's ESOP account, as follows:
for Mr. Graber (i) 2001 - $414 and $33,592, (ii) 2000 - $414 and
$25,273, and (iii) 1999 - $270 and $26,259; for Mr. Caputo (i) 2001 -
$774 and $24,505, (ii) 2000 - $774 and $18,309, and (iii) 1999 - $697
and $16,375.
8
The following table provides information for Messrs. Graber and Caputo
as to stock options exercised during fiscal 2001 and the value of options held
as of December 31, 2001. No options were granted to Mr. Graber or Mr. Caputo
during fiscal 2001.
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AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END
OPTION VALUES
- -------------------------------------------------------------------------------------------------------------------
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FY-END(#) FY-END($)(2)
---------------------------- -----------------------------
SHARES ACQUIRED VALUE
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
(#) (#) ($) ($)
- ------------------------------------------------------------------------------------------------------------------
Joseph A. Graber 1,000 $4,205(1) 11,251 --- $15,435 $---
- ------------------------------------------------------------------------------------------------------------------
Victor E. Caputo --- --- 10,500 --- $39,375 $---
==================================================================================================================
(1) Represents the difference between the market value of the shares acquired
at the time of exercise ($10.88 per share) and the exercise price ($6.67
per share).
(2) Represents the aggregate value (market price of the Common Stock less the
exercise price) of the in-the-money options held based upon the option
exercise prices of $7.75 per share for 2,504 shares, $11.69 for 1,747
shares and $14.56 per share for 7,000 shares for Mr. Graber and $7.75 per
share for 7,500 shares and $14.56 per share for 3,000 shares for Mr.
Caputo, and the closing price per share of the Common Stock on December 31,
2001 of $13.00, as reported on The Nasdaq Stock Market. An option is
in-the-money if the market value per share of the Common Stock exceeds the
exercise price of the option. Accordingly, as of December 31, 2001, 7,000
of Mr. Graber's options were not in-the-money and 3,000 of Mr. Caputo's
options were not in-the-money.
EMPLOYMENT AGREEMENTS
The Bank has entered into employment agreements with Messrs. Graber,
Caputo, Perri and Trofimuk. These agreements are intended to assist the Bank and
the Company in maintaining a stable and competent management base. The continued
success of the Bank and the Company depends significantly on the skills and
competence of their officers. The employment agreements provide for an annual
base salary in an amount not less than the employee's then current salary,
discretionary bonuses as determined by the Bank's Board of Directors and an
initial term of three years with respect to Messrs. Graber and Caputo, and one
year with respect to Messrs. Perri and Trofimuk. The agreements provide for an
extension of one year, in addition to the then-remaining term under the
agreement, on each anniversary of the effective date of the agreement, subject
to a performance evaluation performed by disinterested members of the Board of
Directors of the Bank. The term of each agreement has been extended pursuant to
this provision on every anniversary of the agreement's effective date that has
occurred since the execution of the agreement. The agreements provide for
termination upon the employee's death, for cause or in certain events specified
by Office of Thrift Supervision ("OTS") regulations. The agreements are also
terminable by the employee upon 90 days notice to the Bank. The agreements
guarantee participation in an equitable manner in employee benefits available to
executive personnel of the Bank.
The employment agreements provide that if the employee's employment is
involuntarily terminated, other than for cause or due to death or disability, he
will be entitled to continuation of his salary and insurance benefits for the
remaining term of the agreement. If employment is involuntarily terminated,
other than for cause or due to death, disability or specified violations of law,
in connection with or within 12 months after a change in control of the Company
or the Bank, the employee will be entitled to change in control benefits
consisting of the continuation of his salary and the same health benefits for
the remaining term of the agreement, plus a lump sum payment equal to a
specified percentage of the employee's "base amount" of compensation for
purposes of Section 280G of the Internal Revenue Code (299% for Messrs. Graber
and Caputo, and 100% for Messrs. Perri and Trofimuk). These change in control
benefits are limited so that
9
in the aggregate they will not exceed three times the employee's average annual
compensation over the most recent five-year period or be non-deductible by the
Bank for federal income tax purposes pursuant to Section 280G. The term "change
in control" is defined in the employment agreements as any event which would
require the filing of an application for acquisition of control or notice of
change in control pursuant to 12 C.F.R. ss. 574.3 or 4. Such events are
generally triggered prior to the acquisition or control of 10% of the Company's
Common Stock. The term "involuntary termination" is defined generally as
termination of employment by the Bank without the employee's consent or by the
employee following a material reduction of or interference with his duties,
responsibilities or benefits without his consent.
Based on their current salaries, if the employment of Messrs. Graber,
Caputo, Perri and Trofimuk had been terminated as of December 31, 2001 under
circumstances entitling them to change in control benefits as described above
and without regard to any reductions that may be required under the agreements,
they would have been entitled to receive lump sum cash payments of approximately
$426,000, $319,000, 79,000 and $64,500, respectively.
CERTAIN TRANSACTIONS
The Bank has followed a policy of granting consumer loans and loans
secured by the borrower's personal residence to officers, directors and
employees. All loans to executive officers and directors are made in the
ordinary course of business and on the same terms and conditions as those of
comparable transactions prevailing at the time, in accordance with the Bank's
underwriting guidelines, and do not involve more than the normal risk of
collectibility or present other unfavorable features. Loans to executive
officers and directors must be approved by a majority of the disinterested
directors and loans to other officers and employees must be approved by the
Bank's Loan Committee. All loans by the Bank to its directors and executive
officers are subject to OTS regulations restricting loan and other transactions
with affiliated persons of the Bank. Federal law currently requires that all
loans to directors and executive officers be made on terms and conditions
comparable to those for similar transactions with non-affiliates. As required
under Federal law, all loans to executive officers and directors are made in the
ordinary course of business and on the same terms and conditions as those of
comparable transactions prevailing at the time, in accordance with the Company's
underwriting guidelines, and do not involve more than the normal risk of
collectibility or present other unfavorable features.
The Bank has made several loans to its directors and officers, or
certain family members or affiliates thereof, in the ordinary course of business
and on the same terms, including collateral and interest rates, as those
prevailing at the time for comparable transactions with other persons and which
did not involve more than the normal risk of collectibility or present other
unfavorable features or which complied with applicable rules concerning loans to
such persons in effect at the time when the loans were made.
10
II. RATIFICATION OF THE APPOINTMENT OF AUDITORS
The Board of Directors has appointed Crowe, Chizek and Company LLP to
be the Company's independent auditors for the 2002 fiscal year, subject to the
ratification of the appointment by the Company's stockholders at the Meeting. A
representative of Crowe, Chizek and Company LLP is expected to attend the
Meeting and will respond to appropriate questions and have an opportunity to
make a statement if he so desires.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF CROWE, CHIZEK AND COMPANY LLP AS THE
COMPANY'S INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2002.
In October 2000, the Company's Board of Directors replaced KPMG LLP
with Crowe, Chizek and Company LLP as the Company's independent auditors for the
fiscal year 2001. The decision to engage new auditors was recommended by the
Company's Audit Committee and approved by the Company's Board of Directors based
upon a review of accounting and tax service providers.
The reports of KPMG LLP on the Company's consolidated financial
statements for the years ended December 31, 2000 and December 31, 1999 did not
contain an adverse opinion or disclaimer of opinion, and the reports were not
qualified or modified as to uncertainty, audit scope or accounting principles.
In connection with the audits of the Company's financial statements for each of
the fiscal years ended December 31, 2000 and December 31, 1999, there were no
disagreements with KPMG LLP on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure which, if not
resolved to the satisfaction of KPMG LLP would cause KPMG LLP to make reference
to the matter in their report.
During the fiscal years ended December 31, 2000 and December 31, 1999,
the Company did not consult with Crowe, Chizek and Company LLP regarding any
matter that was either the subject of disagreement or a reportable event, nor
did the Company consult Crowe, Chizek and Company LLP regarding the application
of accounting principles to a specified transaction, either completed or
proposed, or the type of audit opinion that might be rendered on the Company's
financial statements and no written report or oral advice was provided which was
an important factor considered in reaching a decision as to any accounting,
auditing or financial reporting issue.
For the fiscal year ended December 31, 2001, Crowe, Chizek and Company
LLP provided various audit and non-audit services to the Company. Set forth
below are the aggregate fees for these services:
(a) Audit Fees: Aggregate fees for professional services rendered
for the audit of the Company's fiscal 2001 annual financial
statements: $32,000.
(b) SEC filings: $12,000
(c) Financial Information Systems Design and Implementation Fees:
$0.
(d) All other fees: $6,500.
The Audit Committee of the Company's Board of Directors has considered
whether the provision of services covered by item (c) above is compatible with
maintaining the independence of Crowe, Chizek and Company LLP.
11
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the Company's next
annual meeting must be received by the Company's Secretary at the Company's main
office, located at 100 West North Avenue, Chicago, Illinois 60610-1399, no later
than November 15, 2002 to be eligible for inclusion in the Company's proxy
statement and form of proxy relating to the next annual meeting. Any such
proposal will be subject to the requirements of the proxy rules adopted under
the Securities Exchange Act of 1934, as amended, and as with any stockholder
proposal (regardless of whether included in the Company's proxy materials), the
Company's certificate of incorporation and bylaws and Delaware law.
To be considered for presentation at the next annual meeting, but not
for inclusion in the Company's proxy statement and form of proxy for that
meeting, proposals must be received by the Company no later than January 26,
2003. If, however, the date of the next annual meeting is before April 6, 2003
or after June 25, 2003, proposals must instead be received by the Company by the
later of the 90th day before the date of the next annual meeting or the tenth
day following the day on which notice of the date of the next annual meeting is
mailed or public announcement of the date of the next annual meeting is first
made. The term "public announcement" means disclosure in a press release
reported by a nationally recognized news service or in a document publicly filed
by the Company with the Securities and Exchange Commission. If a stockholder
proposal that is received by the Company after the applicable deadline for
presentation at the next annual meeting is raised at the next annual meeting,
the holders of the proxies for that meeting will have the discretion to vote on
the proposal in accordance with their best judgment and discretion, without any
discussion of the proposal in the Company's proxy statement for the next annual
meeting.
OTHER MATTERS
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition to solicitation by mail,
directors, officers and employees of the Company or the Bank may solicit proxies
personally or by telegraph or telephone without additional compensation.
BY ORDER OF THE BOARD OF DIRECTORS
Victor E. Caputo
Corporate Secretary
Chicago, Illinois
March 15, 2002
12
NORTH BANCSHARES, INC.
ANNUAL MEETING OF STOCKHOLDERS
APRIL 26, 2002
The undersigned hereby appoints the Board of Directors of North
Bancshares, Inc. (the "Company"), and its survivor, with full powers of
substitution, to act as attorneys and proxies for the undersigned to vote all
shares of common stock of the Company which the undersigned is entitled to vote
at the Company's Annual Meeting of Stockholders (the "Meeting") to be held at
the main office of the Company, located at 100 W. North Avenue, Chicago,
Illinois on April 26, 2002 at 4:00 p.m., local time, and at any and all
adjournments and postponements of the Meeting.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED FOR THE NOMINEES FOR ELECTION NAMED ON THIS
PROXY CARD AND FOR THE RATIFICATION OF THE APPOINTMENT OF CROWE, CHIZEK AND
COMPANY LLP AS THE COMPANY'S INDEPENDENT AUDITORS. IF ANY OTHER BUSINESS IS
PRESENTED AT THE MEETING, THIS PROXY WILL BE VOTED BY THE BOARD OF DIRECTORS IN
ITS BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER
BUSINESS TO BE PRESENTED AT THE MEETING.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE
NOMINEES LISTED IN ITEM 1 AND "FOR" THE RATIFICATION OF
THE APPOINTMENT OF AUDITORS NAMED IN ITEM 2.
1. The election as directors of all nominees listed below (except as marked
to the contrary):
[ ] FOR [ ] VOTE WITHHELD [ ] FOR ALL EXCEPT
INSTRUCTION: TO VOTE FOR ALL NOMINEES, MARK "FOR." TO WITHHOLD YOUR VOTE
FROM ALL NOMINEES, MARK "VOTE WITHHELD." TO VOTE FOR ONE OR
MORE NOMINEES, BUT NOT ALL NOMINEES, MARK "FOR ALL EXCEPT"
AND STRIKE A LINE THROUGH THE NAME(S) OF THE NOMINEE(S) FROM
WHOM YOU WISH TO WITHHOLD YOUR VOTE.
ELMER L. HASS ROBERT H. RUSHER FRANK J. DONATI
2. The ratification of the appointment of CROWE, CHIZEK and COMPANY LLP as
independent auditors for the Company for the fiscal year ending December
31, 2002.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Continued and to be SIGNED on Reverse Side)
In its discretion, the Board of Directors, as proxy for the stockholder,
is authorized to vote on any other business that may properly come before the
Meeting or any adjournment or postponement thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
This Proxy may be revoked at any time before it is voted by: (i) filing
with the Secretary of the Company at or before the Meeting a written notice of
revocation bearing a later date than this Proxy; (ii) duly executing a
subsequent proxy relating to the same shares and delivering it to the Secretary
of the Company at or before the Meeting; or (iii) attending the Meeting and
voting in person (although attendance at the Meeting will not in and of itself
constitute revocation of this Proxy). If this Proxy is properly revoked as
described above, then the power of the Board of Directors to act as attorney or
proxy for the undersigned shall be deemed terminated and of no further force and
effect.
The undersigned acknowledges receipt from the Company, prior to the
execution of this proxy, of notice of the Meeting, a Proxy Statement and an
Annual Report to Stockholders.
Dated:
-------------------------
------------------------------- -------------------------------
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
------------------------------- -------------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears above on this card. When
signing as attorney, executor, administrator, trustee or guardian,
please give your full title. If shares are held jointly, each
holder should sign.
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PLEASE PROMPTLY COMPLETE, DATE, SIGN AND MAIL THIS PROXY IN
THE ENCLOSED POSTAGE-PAID ENVELOPE
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